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China agrees restructuring of Congo Republic debt

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The OPEC member owes state-owned Chinese entities and other creditors including commodity traders Glencore and Trafigura Beheer more than $9 billion.

Sunday 05, May 2019

(Bloomberg) --China has agreed to restructure debt owed by the Republic of Congo, one of a series of preconditions sought by the International Monetary Fund (IMF) before it grants the debt-laden central African nation a bailout.

Thierry Moungalla, the Congolese Government spokesman, said that the restructuring was agreed on 29 April at a meeting between a high-level Congo government delegation and officials in Beijing, adding that the details of the restructuring aren’t immediately available.

The government has been trying to secure funding from the IMF since March 2017 to revive an economy that barely grew in 2018, after contracting in the two previous years as oil prices declined.

“Congo has just scaled a major hurdle with this debt restructuring with China because it was the most important of the debts that we had to restructure and which was also an obstacle to obtaining the bailout agreement with the IMF,” Moungalla said.

Moungalla said that Chinese entities account for about 34 percent of Congo’s external debt.

The Jubilee Debt Campaign said that China is the largest single creditor nation to African countries, accounting for about 20 percent of the continent’s external debt.

The discussions between Congolese and Chinese authorities echo similar talks taking place with officials from Zambia, which is seeking a debt swap to ease pressure on its foreign reserves

According to a February 2018 report by the French Embassy in Congo, the Western African nation’s external debt to China is estimated at XAF 1.6 trillion ($2.7 billion).

Private creditors like Glencore and Trafigura are owed XAF 1.2 trillion, it said.

Congo also has a $322 million-euro bond maturing in 2029, the price has soared to 87 cents on the dollar from 79 cents since late April.

The government will now focus on dealing with debts owed to private creditors, which also include Nigerian lender UBA, added Moungalla.

The IMF said in November that Congo’s government must take a series of steps before the lender agrees to a bailout, including reforms to improve governance and transparency, adjustments to the state budget.

 

TAGS : Congo debt restructuring , IMF, Glencore, Trafigura, Zambia debt restructuring

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